Coase-Sandor Working Paper Series in Law and Economics

Publication Date

2020

Publication Title

Coase-Sandor Working Paper Series in Law and Economics

Abstract

In recent years, trademark scholars have come to recognize that the supply of words, sounds, and symbols available to designate new goods and services is an exhaustible resource. In certain sectors, the most common English words and syllables and the most common U.S. surnames are almost all claimed as marks. Some firms have responded by resorting to ever-more-unusual brand names so as to avoid trademark disputes. Scholars have proposed solutions ranging from raising registration fees to narrowing the scope of trademark rights.

In this Article, we frame trademark law’s governance of “linguistic space” as a balancing act between what we term proximity costs and distance costs. Proximity costs, the conventional focus of trademark doctrine, occur when different firms use marks that are close in linguistic space—think Zantac (for heartburn) versus Xanax (for anxiety). Distance costs arise when firms use marks that are difficult to remember because of their length or their far remove from the core of semantic signifiers familiar to most consumers—staying in the medicine cabinet, think Valsartan (for high blood pressure) or Namzaric (for memory loss). Although conceptually different, proximity costs and distance costs both create similar practical problems. Both make it more difficult for consumers to purchase and communicate about brands, and both make it harder for new entrants to establish and defend their market share.

Our proximity-distance framing has conceptual payoffs for trademark law. We explain why responses to the crowding of linguistic space internal to trademark law cannot escape some tradeoff between proximity costs and distance costs. Allowing mark holders to control a larger swath of linguistic space reduces proximity costs, but at the expense of pushing other firms to the periphery of linguistic space, increasing distance costs. Similarly, weakening trademark protection to allow more firms to locate their marks in the linguistic core reduces distance costs, but with some increase in proximity costs. Our framing thus shows how the policy problems of trademark law parallel the challenges of managing scarcity in real property. As we draw inspiration from solutions to urban congestion and sprawl, we suggest how non-trademark interventions can lead to more efficient use of linguistic space, promoting product identification without raising proximity or distance costs. Our approach thus points to the possibility of using a plurality of legal and policy tools to address the proximity-distance dilemma at trademark law’s heart. And by relieving some of the pressure on trademark law to resolve the proximity-distance dilemma on its own, our approach frees trademark law to pursue a wider range of goals and to vindicate a broader variety of values.

Number

917

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